Mindstorms 1999 Strategy

Corporate Strategy 1999

Founded in Denmark, 1932
Worlds 5th largest toy manufacturer
Manufactures, distributes and retails plastic building block kits - LEGO Primo, LEGO Duplo, LEGO System and LEGO Technic
Employees 10 000 people
Revenue US$1.1 billion
CEO, Kjeld Kirk Kristiansen
New businesses - LEGOland, LEGO Lifestyle, LEGO Media, LEGO Mindstroms
LEGO Group

1984 Early R+D
1986 Launched computerized building set for schools; deemed premature
1993 Strategic business unit created after the successful trial of a programmable brick
1995 Home PC ownership and Internet usage is sky-rocketing. Market dominated by game-oriented ‘edutainment’ products
1996 Target market identified: Conscious, Caring and Capable parents, (CCC), 20% of US households
1997 LEGO Mindstorms launches
LEGO Mindstorms

Integrate or continue unabated?

Macro Environmental Analysis

Political Instability in the developing world; WTO free-trade negotiations breakdown; and European Parliament elections.

Economic Euro introduced as Denmark abolishes the Krone; changes to the Danish taxation system; and the Internet boom is still aiding economic growth

Sociological Changing attitudes to early childhood development; away from instructional methods; and leisure time is evolving from outdoor activities.

Technological Speed of information technology increasing; communication networks impacting on society; and internet and PC games impacting the toy market.

Legal Labour market reforms in Denmark; and potential changes to intellectual property laws.

Environmental Increasing global concern for the environment; over consumption and over population; governments intervening

Industry Analysis

Industry Rivalry

Flexibility Adaptation; speed to market; pricing; and distribution.
Innovation In products; services; support; and technology features.
R+D Continual new and exciting products
Brand awareness Market appeal
Economies of scale Vital for profit margin
Business Synergies Across LEGO group
Critical Success Factors

SWOT Analysis

Strengths
LEGO
Resolved vision;
Outstanding reputation;
Extensive distribution network;
Success in addressing org. mindset problems; and
High brand awareness amongst target market.
Mindstorms
Astute marketing;
Flexible, timely operations;
Global vision;
Products reflect LEGO’s foundation; and
Strong launch and initial sales.

Weaknesses
LEGO
‘ Instructionism’ products;
Poor sales growth in recent years; and
Viewed as ‘ entertainment ’ rather than ‘ education’ company.
Mindstorms
Partnership conflicts.
Staff that lack LEGO knowledge

Opportunities
LEGO
New alliances with major players, i.e. Lucas Films and Star Wars brand; and
Economies of scale opportunities through integration with Mindstorms .
Mindstorms
Further market penetration; and
Establish new target market with schools.

Threats
LEGO
Declining profitability;
New competitors; and
Increased internal conflicts;
Mindstorms
Unfamiliar substantive competitors, i.e. Sony, Microsoft, Nintendo and Sega.

Company Analysis

Corporate Strategy Perspectives

LEGO’S Current Corporate Strategy Since the early 90’s senior management have been working towards an integrated organisation perspective; CEO was preaching a universal approach revolving around ideas, exuberance and values; and Merging activities and processes to become more efficient, realizing synergies ahead of retaining responsiveness.

LEGO’S Current Corporate Strategy Formally structured core business; Strategy was focused on planning, forecasting trends, and product programming. The fitness program , involves reducing organisational layers and staff, clearer lines of responsibilities and a greater customer focus. Predictable product lifecycles; Continuous marginal improvement;

Business Strategy Perspectives

LEGO’S Current Business Strategy Variance in business strategies across the SBU’s; New business units have an outside-in perspective; Core business has an inside-out perspective; but Recent core activities project a change towards a market focused strategy (outside-in strategy).

Functional Analysis

Mindstorms Capabilities HR Experienced early challenges; hired externally; global recruitment; seeking fast paced innovative employees. Marketing Decentralised from LEGO core. Pricing For price leadership. Distribution Hybrid non-traditional channeling created conflict with the core distribution. Promotion Outsourced PR/advertising focused only on the US market.

Mindstorms Performance Financial Sales are 1% of LEGO; goal to increase growth rapidly; high cash needs; and financial losses in 1998 resulted in 1000 job losses. Customer Creating awareness; online communities are attracting adults; competitive robotic events are attracting children. Internal Build strong supply chains; operational efficiency; economies of scale. Growth Synergies aligned with constructionist values and core competencies; responsiveness to market through innovative.

Recommendations

Hybrid Corporate Perspective

Manufacturing and Production Sharing value-added activities; Lean manufacturing; Parallel production processes; and Economies of scale.

Suppliers and Channel Partners Aligning positions to improve competitiveness; Channel partner synergies; and Strengthening existing relationships

Internal Cultural Challenges Remain innovative; via The creation of a Mindstorms Champion Group.

Finance Leveraging resources; Reduced operating costs; Sustainable growth; and Increased Profit margins.

References
De Wit, B and Meyer, R 2004, Strategy:process, content, context. International Thomson, Singapore Ireland R D., Hoskisson R E. & Hitt M A., 2008, Understanding Business Strategy, Concepts & Cases 2 nd Ed. Cengage Learning, Hubbard, G 1990, Analysing a Case, in Cases of Strategic Management: Australia and New Zealand, G Lewis, A Morkel, G Hubbard, G Stockoprt, and S Davenport (eds), 2 nd ed, pp. viii-xvi, Prentice Hall Sydney Porter, M, (1998) Competitive Strategy: Techniques for analyzing industries and competitors , Free Press 1999 Statistics, Denmark viewed on August 10, 2009 <http://www.dst.dk/HomeUK/Guide/economico/1999.aspx > Environmental Issues – Global Issues viewed on August 10, 2009 < http://www. globalissues .org/issue/168/environmental-issues > Lego Financial Accounts 2001 viewed on August 20, 2009 < http://cache.LEGO ｮｮ. com/downloads/aboutus/accounts2001eng. pdf > Lego Mindstorms – What went wrong? Viewed on August 20, 2009 < http://www. techuser .net/LEGO ｮ. html > Lego Pressroom Archives displaying historic financials viewed on August 20, 2009 < http://www1.LEGO ｮ. com/eng/info/default.asp? page=pressdetail & contentid=99 & countrycode=2057 & yearcode=2000 & oldXML=true &archive=true > Effects of Overconsumption and Increasing Populations viewed on August 10, 2009 < http://www. globalissues .org/article/216/effects-of-over-consumption-and-increasing-populations > BCG Growth-Share Matrix viewed on August 20, 2009 < http://www. netmba . com/strategy/matrix/bcg/ > Historic Exchange rates viewed on 10 August, 2009 < http://www.xe.com/ict/>

Image References
Slide 1 - http://wallpapers.free-review. net/r ?12 2 - http://www. viajejet . com/wp-content/viajes/fotos-de-uno-de-los-parque-de-legoland .jpg 3 - http: //perfectgift . exteen .com/images/toys/LEGO_Mindstorms_NXT_2.jpg 4 - http://www. robotoys .com/LOGO_PIXEL_01.gif 5 - http://www. dep .org. uk/downloads/personalglobaldiagram .gif 6 - http://image63. webshots .com/63/3/19/6/453531906Rnpyvp_fs.jpg 7 - http://www. digitalbirmingham .co.uk/blog/wpcontent/uploads/2009/03/fibre-optic.jpg 8 - http: //thundafunda .com/3993/images/1600_1200/children-pictures/cute-boy-playing-video-games-computer.jpg 9- http://www. digitalbirmingham .co.uk/blog/wp-content/uploads/2009/03/fibre-optic.jpg 10 - http://www. unisa . edu . au/crma/images/criminal_justice_jurisprudence .jpg 11 http://www.ban.org/ban_news/2008/images/080415_beware_free_electronic_waste_collection_events_300dpi.jpg 12 - http://www. geovista . psu .edu/images/img5-1_industry_analysis_NEW2.jpg 14 - http://farm1.static. flickr .com/24/99387355_9ef08fe070.jpg? v=1154158149 15 - http://lams. epfl .ch/course/marketing2008/mktg2008_week3_wegmann_2_swot_1.jpg 16 - http: //legomyphoto .files. wordpress .com/2008/09/imgp4895.jpg 17 - http: //legomyphoto .files. wordpress .com/2008/09/day113.jpg 18- http: //legomyphoto .files. wordpress .com/2008/09/day117.jpg 19 - http://saber-scorpion. com/lego/images/Halo/army_mareenz .jpg 20 - http://farm1.static.flickr.com/117/305410323_effd579e8f.jpg 22 & 23 - http://www. a-jenterprises . com/Bios/lego %20people.jpg 25 - http: //legomyphoto .files. wordpress .com/2009/03/day283.jpg? w=500 & h=334 26 - http://www.me. unlv .edu/Undergraduate/coursenotes/egg102/9794-parts.jpg 27 - http://engk12. ece . missouri . edu/LegoCamp/pictures/NXT %20Robots/LEGO%20NXT%20Brick.jpg 28 - http: //blogs .wsd1.org/etr/files/browserloop2. png 29 - http://www. lego .com/info/images/pho102x170dkMindstorms.jpg 31 - http://www.guardian.co.uk/lifeandstyle/gallery/2009/mar/26/lego-pictures?picture=345081215 32 - http://images. doublebrick .ru/sets/sl/lego-7734-1.jpg 33 - http://www.1000steine.com/brickset/images/852513-1.jpg

Mindstorms 1999 Strategy

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